Writen by Janica Grech – Card Schemes Relations and Business Analyst Manager

The global pandemic has forced consumers to make drastic changes to their lifestyle and customs; such as changing their spending behaviours and their go-to payment methods to shop for necessities. Consumers quickly changed their belief that ‘Cash is King’ to a faster, safer, more hygienic and convenient payment methods which lead to a boom in contactless & mobile payments and online shopping (e-commerce), as people are now refraining from using cash or physically visiting stores.

Due to the current situation and the recent lifestyle changes, merchants are expecting to see a spike in the number of disputes. The combination of ramped up POS use, high purchase volumes as cardholders rely on card payments, and the possible cut back in spending due to job loss or economic fear creates concerns that fraud will emerge.

In response to the current situation, the schemes have acted promptly to try to minimise the impact on merchants as well as protecting cardholders by issuing updated programs, release timelines, and addressed FAQs and best practices for merchants during the COVID-19 outbreak

Increase in contactless payment limits in Europe

For card present transactions across Europe, focusing mainly on Domestic transactions, Visa and Mastercard have both increased the minimum amount required for a cardholder to input their verification (CVM). The increased limits are allowing cardholders to process transactions of higher value without requiring a PIN or signature, therefore limiting cardholders to have physical contact with POS terminals which will help minimising the spread of the coronavirus

The new limits per country are as follows;

Country Currency Old Limit VISA New Limit VISA Old Limit MC New Limit MC
Austria EUR 25 50 25 50
Belgium EUR 20 50 25 50
Bulgaria BGN 50 100 50 100
Croatia HRK 100 250 100 350
Cyprus EUR 20 50 20 50
Estonia EUR 25 50 25 50
France EUR 30 50 30 50
Germany EUR No update No update 25 50
Gibraltar GIP No update No update 20 45
Greece EUR 25 50 25 50
Hungary HUF 5000 15000 5000 15000
Iceland ISK 5000 7500 No update No update
Ireland EUR 30 50 30 50
Latvia EUR 25 50 25 50
Liechtenstein CHF 40 80 40 80
Lithuania EUR 25 50 25 50
Luxembourg EUR No update No update 25 50
Malta EUR 20 50 25 50
Monaco EUR 20 50 25 50
Netherlands EUR 25 50 25 50
Norway NOK 400 500 No update No update
Poland PLN 50 100 50 100
Portugal EUR 20 50 20 50
Romania RON No update No update 100 200
Russia RUB No update No update 1000 5000
Slovakia EUR 20 50 20 50
Spain EUR 20 50 20 50
Sweden SEK No update No update 200 400
Switzerland CHF 40 80 40 80
Turkey TRY 120 250 120 250
UK GBP 30 45 30 45

Best Practices for online merchants when processing refunds while trying to avoid Disputes

To avoid an incursion of Chargebacks, online merchants are advised to continuously monitor the current situation by making sure that their website is updated accordingly. By doing so, merchants will encourage cardholders to try resolving their issues with the merchants first, rather than going straight to their issuing banks and initiate a chargeback. Many businesses are already offering refunds, store credit or vouchers, fee waivers or suggesting rescheduling of events, flights, or bookings which were cancelled. Merchant websites are advised to include;

  1. Clear instructions on how the cardholder can get in contact with merchant’s customer support,
  2. Make cardholders aware that they are receiving an influx of requests to process refunds or queries therefore it may take longer than expected to get a reply,
  3. If merchants are processing automatic refunds, they should include it in their website to avoid any unnecessary calls or inquires

If merchants are processing automatic refunds, they should include it in their website to avoid any unnecessary calls or inquires

Merchants offering Free Trials or Discounted Introductory Promotions mandatory actions (VISA)

Keeping in mind that a lot of people were bound to stay at home due to a total lockdown imposed by their governments, customers registering for subscriptions such as food delivery, music or online movies has increased substantially. Merchants offering introductory promotions or free trials must still comply with the following set of actions and rules issued by VISA by 18th April 2020;

  1. Merchants must require the cardholders’ authorisation after the free trial period is expired whilst providing the acquirer with the terms and conditions that the cardholder had given his/her consent before initiating the trial period (if required),
  2. Remind cardholders that the trial period is about to expire before it expires,
  3. Letting customers know that unless subscriptions are cancelled before the trial period is over, they will be charged for full subscription prices automatically.
  4. Provide easy procedures for the cardholder to cancel their subscription.

Enhanced Statement Descriptor for merchants offering Free Trials/Introductory Promotions

VISA has deferred the effective date of merchants having a mandatory enhanced statement descriptor for subscriptions ending the trial or discounted periods to 18th April 2021.

Modification of Excessive Disputes Monitoring Programs and Fees (VISA)

Visa Dispute Monitoring Program (VDMP) and Visa Fraud Monitoring Program (VFMP) are both halted for directly affected merchants in the Travel and Entertainment (T&E) industry until 31st July 2020. VISA will also consider waiving or suspending the VDMPs and VFMPs if merchants can prove that they have been directly impacted by COVID-19 even though they might NOT be registered as T&E merchants.

Excessive Chargeback Program (MasterCard)

Just like VISA, MasterCard have announced that they will keep on doing their usual monitoring to detect scams but merchants which are directly impacted by COVID-19 will be excluded from the Excessive Chargeback Program until 1st August 2020; such as airlines, cruise liners and travel agents.

At MasterCard’s discretion, flexibility of falling under the ECP will be given to other industries if merchants can show evidence that their high chargeback rates were ascribed to COVID-19.

Registration regulations for MCCs 5122 and 5912 (Mastercard)

Mastercard has issued a registration waiver for merchants or sub merchants that usually do their business face-to-face with their clients but had to temporarily shift to doing most of their business online due to the COVID-19 outbreak.

The waiver is only applicable until 30th September 2020 for merchants having MCCs 5122 (Drugs, Drug Proprietors, and Druggists Sundries) and TCC T for wholesale purchases, or MCC 5912 (Drug Stores, Pharmacies) and TCC T for retail purchases. Pharmaceutical and Tobacco Product Merchants who does most of their pharma business online, still need to be registered with MasterCard.